Brent oil price ends week over $126 on Middle East, dollar

9 April 2011 9 April 2011

BonTrade

Brent crude oil prices surged nearly $8 higher in the last five trading sessions to $126 a barrel as unrest in the Middle East and a much weaker US dollar had investors buying into oil and other commodities.

Brent Oil Futures – Closing Price

Brent crude oil futures for May 2011 delivery ended the week’s trading session at $126.74 a barrel on the ICE Futures Exchange yesterday evening, a big $7.81 gain over last week’s closing price of $118.93 a barrel. Traders expected oil prices to push higher this week.

Oil Price Premium – Middle East

Unrest in the Middle East and Africa has added a $20 to $25 premium to oil prices since the toppling of regimes in Tunisia and Egypt in the last few months, according to Mike Wittner, head of commodities research at Societe Generale.

Yesterday in the Middle East, 22 demonstrators were killed in Syria and four were shot dead in Yemen, while in Egypt, protesters staged one of the biggest rallies since President Hosni Mubarak’s fall.

Weaker US Dollar Boosts Oil Prices

Oil prices ended at their highest level in 30 months on Friday, rising for the sixth day out of seven trading sessions and pushing gains to a third week, as a decline in the US dollar helped push a broad rally in commodities.

The US dollar was weighed down by a potential US government shutdown which analysts said could hinder US economic recovery, and by expectations that interest rate differentials will widen further in Europe’s favour.

The ICE Dollar Index, which tracks the US dollar against six major world currencies fell back below 75 and ended yesterday’s trading session at low not seen since November 2009.

A weaker US dollar tends to lift oil prices and commodities higher, however future oil supply concerns out of the Middle East remain the main driver of Brent and WTI oil prices.